Macau casino suspect transaction reports up 38pct in 1H17

Suspicious transaction reports filed by Macau casinos increased by 37.7 percent year-on-year in the first half of 2017, said the city’s Financial Intelligence Office in its latest newsletter.

The city’s gaming sector remained the main source for such transaction reports made locally in the first six months of 2017, accounting for 1,074 cases, or 70.3 percent of the total. Most of the other cases were filed by financial or insurance sector operators.

A total of 1,546 suspicious transaction reports were filed by the Macau casino sector in full-year 2016, representing a 24.0 percent year-on-year increase.

The lodging of such reports does not in itself indicate criminal activity has occurred, but does indicate that a transaction has been earmarked for closer scrutiny.

Common types of suspicious transactions reported by Macau’s casinos include chip conversion with minimal or no gambling activity, and chip conversion or marker redemption on behalf of third parties.

Under the rules on reporting of suspicious transactions, Macau casinos are required to report to the Financial Intelligence Office any wagering, gaming credit or gaming promotion activity that, “based on [their] nature, complexity, the amount involved or in a non-habitual manner indicates any activities of money laundering or terrorist financing”.

Separately, casinos in Macau are also required to report to the local regulator, the Gaming Inspection and Coordination Bureau, high value transactions worth over MOP500,000 (US$62,500).

The Financial Intelligence Office received an aggregate of 1,527 suspicious transaction reports in the first half of 2017, up by 36.6 percent in year-on-year terms.

The body sent a total of 79 cases to the Public Prosecutions Office for further investigation; that was fewer than the 135 cases sent for further investigation in the first half of 2016.

There were no details in the report on the number of cases submitted to the Public Prosecutions Office that led to prosecutorial action, nor on how many of the cases submitted for further investigation were related to the gaming sector.

Macau’s gaming regulator last year extensively revised the anti-money laundering rules for the sector, but kept the threshold set for casinos to report “large” transactions at MOP500,000. The new rules were enacted on May 13, 2016.

Notwithstanding the announced changes to Macau’s AML rules, the U.S. State Department has repeatedly called for Macau to reduce the large sum transaction reporting threshold of MOP500,000 to the equivalent of US$3,000 “to bring it in line with international standards”.

A recent focus for the Macau government has been tighter controls on the large volumes of money flowing through the city’s casinos via VIP gambling. Such play is typically funded by credit issued by government-licensed gaming promoters – commonly referred to as junkets. They also arrange – via agents and sub-agents – collections on player gambling losses.

The Asia/Pacific Group on Money Laundering (APG) said in July – following a mutual evaluation conducted between it and the Macau authorities on the city’s anti-money laundering and counter-terrorist financing measures – that “sound, risk-based supervision” was being undertaken in Macau’s gaming sector. But there was also a need for better understanding among the Macau VIP gambling promoters of the recently updated local rules on money laundering and terrorism financing risk, it added at the time.

The APG also noted in its final version of the evaluation, issued on December 1, that – as of the date of its study – there had been only five money laundering convictions via the Macau courts. The body suggested a “shortage of prosecutorial resources in the Public Prosecutions Office, heavy evidentiary requirements for third-party money laundering, and the lack of an adequate policy directive,” had been factors in the scarcity of such convictions.